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Handling Competent Authority Cases
Caplin & Drysdale
Handling Competent Authority Cases

The Competent Authority process is designed to help taxpayers like you avoid, or at least minimize, international double taxation, and to provide other forms of assistance to U.S. and foreign taxpayers in an international context. Many taxpayers are unfamiliar with the Competent Authority mechanism and do not understand on a practical level how the process works or how taxpayers can benefit from it.

Caplin & Drysdale understands the Competent Authority process, knows the players, and uses the process on a regular basis to benefit our clients. Our attorneys have recent experience working with the Competent Authorities of Belgium, Canada, Germany, Japan, Mexico, the United Kingdom and, of course, the United States, to secure treaty benefits and to minimize double taxation for our clients.

Representative Engagements

  1. A foreign government proposed large adjustments to the income of a foreign company doing business in the United States, potentially resulting in double taxation. 

    Result: Caplin & Drysdale worked with the Competent Authorities of the foreign country and the United States and succeeded in structuring a compromise result agreeable to both countries that eliminated the potential for double taxation.

  2. The IRS proposed to disallow foreign tax credits worth tens of millions of dollars on the ground that the taxpayer failed to prove that the foreign taxes were actually owed to the foreign government under foreign law.

    Result: Caplin & Drysdale worked with the Competent Authority of the foreign country to obtain declarations from the relevant foreign tax authorities confirming that the foreign taxes at issue were required to be paid under foreign law. The IRS reversed its position and allowed the foreign tax credits at issue.

  3. A foreign government proposed to decrease the price at which a foreign subsidiary purchased raw materials from its U.S. parent, thus increasing the subsidiary's foreign tax and potentially resulting in double taxation.

    Result: Caplin & Drysdale convinced the U.S. Competent Authority that the foreign adjustment was correct, thereby permitting the U.S. parent to obtain a tax credit for the additional foreign taxes paid and preventing double taxation.

Our Services

If you are faced with the prospect of international double taxation, are concerned that the United States or a foreign country is imposing tax in a manner inconsistent with an income tax treaty, or need government assistance to obtain documents, Caplin & Drysdale can help you:

  • Advise on prior experiences with the Competent Authority of the relevant country and the best strategy for obtaining the requested relief;
  • Prepare written Competent Authority request for assistance, tailored to your situation and the formal (and informal) requirements of the relevant Authority;
  • Meet with the appropriate U.S. and/or foreign government personnel to promote timely and favorable action on the Competent Authority request; and
  • Draft proposed Competent Authority ruling or agreement.
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